The External Social Benefits of Higher Education: Introduction to This Special Issue

This special issue of the Journal of Education Finance presents new, original research on the external social benefits of higher education. The external benefits of higher education are the public, or social, benefits that flow to others including future generations. These are distinguished from private benefits such as individual earnings or individual health that benefit both the college graduate and his or her family. We are excited to present this new research especially because external social benefits provide the main rationale for public support of education at all levels, including higher education. They are also important because they are known to be central to total factor productivity and economic growth (based on modern endogenous growth theory and research). In addition, they are central to per capita development (which includes the non-monetary benefits of higher education beyond earnings). External benefits of higher education, therefore, are vital to development and the well-being of individuals, communities, and nations.

The theme of this special issue is that education, and especially higher education externalities, are central to economically efficient rates of per capita development and therefore crucial to the well-being of an educated society. These external social benefits depend on public funding. This means that education finance, and especially the funding of higher education, profoundly matters.

However, in spite of evidence of underinvestment to be cited, the US and countries around the world are experiencing falling public financial support per student for higher education (Johnstone & Marcucci 2010, SHEEO 2020). This is leading to greater volatility in funding, high tuition, rising privatization, and insufficient and inequitable college access. It has also led to larger class sizes, adverse effects on quality, rising student debt, slower productivity growth, rising income inequality, and differences in education outcomes that are reflected in voting patterns (McMahon 2009). These symptoms all emphasize the central role of adequate human capital skill development requiring both public and private support, and the importance of education finance.

The articles in this special issue start with a broad conceptual and empirical overview, and then focus on specific higher education externalities. There are a range of new findings, both conceptual and empirical. In addition, there is also new research based on new datasets that confirm, reinforce, and extend prior empirical works that show the external social benefits of higher education. The articles that focus on higher education externalities provide empirical estimates of specific external benefits at higher, secondary, and primary levels of education worldwide as well as in 22 developed and 175 less developed countries. Other articles follow on specific externalities in 53 sub-Saharan African countries, the European Union (EU), and Spain and Portugal. The issue concludes with two articles reporting new empirical research in the US, one on civic returns and the other on volatility in state funding for higher education and its adverse implications for external social benefits.

In a single special issue, it is only possible to deeply probe into a few aspects of this vast subject. As such, we have chosen to put externalities into a broad context, hopefully in an innovative way both conceptually and empirically, and then through well-designed articles that reinforce existing evidence and investigate new externalities. We omit evidence based on macro-growth equations because it ignores important evidence based on non-monetary development outcomes beyond earnings or effects on Gross Domestic Product (GDP).

In the process, it is hoped that readers will be inspired to extend knowledge in this vast field. Future research is needed on many under-researched external social benefits, such as the contributions of college graduates over their lifetimes to new ideas and the application of new knowledge, to improving democratic systems and enhancing human rights via political stability, and to achieving environmental sustainability. In addition, new research is needed on how external benefits vary by academic discipline including how the social sciences, humanities, and education fields contribute to the rule of law as well as a fair and just society. More research is also needed to better understand how social benefit externalities contribute to total factor productivity...